Taxing billionaires sounds like an easy way to raise money.
In November, voters will be asked whether to impose a one-time 5% tax on our state’s wealthiest residents. That’s a minimum of $50 million dollars each.
The appeal is obvious. As our state faces financial pressure, especially with billions of dollars in federal cuts, why not tax about 200 ultra-rich residents who can afford it?
Critics say the problem with Prop 40 is that the promises don’t hold up.
California already relies heavily on its wealthiest taxpayers. The top 1% account for a whopping 40 to 50% of our state’s personal income tax.
A wealth tax would give them and their shareholders a strong incentive to consider or even demand a move to tax-friendly state like Texas, Florida, or Nevada.
That could mean losing some of their business investments and philanthropy.
If that were to happen, our state’s nonpartisan Legislative Analyst’s Office warns Prop 40 could lead to a “likely ongoing decrease in state income tax revenues.”
Many countries that tried this type of wealth tax – including Denmark, Germany, and France—later repealed it.
As the wealth gap is growing, it’s understandable that people are frustrated with billionaires exerting outsized influence over our economy and politics.
This is a legitimate frustration and we absolutely need to find a solution to narrow the wealth gap and bring down the cost of living.
Like every proposition on the ballot, Prop 40 isn’t a one-trick pony so we need to consider the full scope of impact that it could have on all of us.
Ariel Roblin is the president and general manager of KCRA 3 and My58. See more of her editorials here.